Question

Analysis of receivables method 9.4A

Accounts receivable = $3,750,000
Allowance for doubtful accounts = $22,750 credit balance
Sales = $48,400,000
Using the aging method the allowance for doubtful accounts is estimated as $390,000
What is the amount of uncollectible accounts?
Adjusted Balance for allowance for doubtful accounts?
Balance Sheet presentation of net realizable value?

Answer 1

The amount of uncollectible accounts is $3,360,000. The adjusted balance for the allowance for doubtful accounts is $412,750. The balance sheet presentation of net realizable value is $3,337,250.

Step-by-step explanation:

The amount of uncollectible accounts can be calculated by subtracting the allowance for doubtful accounts from the accounts receivable. In this case, the uncollectible accounts would be $3,750,000 - $390,000 = $3,360,000.

The adjusted balance for the allowance for doubtful accounts can be calculated by adding the estimated amount from the aging method to the existing credit balance. In this case, the adjusted balance would be $22,750 + $390,000 = $412,750.

The balance sheet presentation of net realizable value will show the net amount of accounts receivable after deducting the allowance for doubtful accounts. It can be calculated by subtracting the adjusted balance for the allowance for doubtful accounts from the accounts receivable. In this case, the net realizable value would be $3,750,000 - $412,750 = $3,337,250.